Which of the following is not correct?
A)Many measures of inequality are based on income, which may not reflect a person's standard of living.
B)Because many of the poorest families receive in-kind transfers, more families have lower standards of living when compared to poverty rates based on income.
C)Because people can borrow and save to smooth out life cycle changes in income, equality measures based only on income may not reflect a person's standard of living.
D)A person's standard of living depends more on her permanent income than her transitory income, so inequality measures based on current income may be misleading.

Question

Quizplus · Accepted Answer

Choice A, C, and D are all correct statements about the limitations of using income as a measure of inequality and standard of living. However, choice B is not correct because in-kind transfers, such as food stamps, housing subsidies, and Medicaid, are included in the poverty rate based on income. These transfers are intended to improve the standard of living of low-income families, so it is not accurate to say that more families have lower standards of living when compared to poverty rates based on income.

Which of the Following Is Not Correct